Mayor Ed Lee pushes “long-term reforms” for pensions

Here’s one advantage to being a caretaker mayor: You can make tough decisions without worrying about their repercussions at the ballot box.

That’s exactly what Mayor Ed Lee has in his quiver as he prepares to make the difficult calls to balance the budget for 2011-12, which now has a $380 million deficit because of a recent $20 million increase in projected pension costs.

Mike Kepka / The Chronicle

Mayor Ed Lee: “I’m not ready to move on taxes.”

“I have an opportunity to actually make some long-term reforms, reforms that will last,” Lee told The Chronicle’s editorial board on Tuesday. “I’m not speaking about any particular politician, but what I generally have felt is that there had been some temporary solutions in the past.”

That was the routine criticism of former Mayor Gavin Newsom’s budgets from his adversaries on the Board of Supervisors’ left wing. Newsom then pointed to the fact that he produced balanced budgets for seven years straight.

So what budget problems need a long-term solution? Pension costs, for one. Newsom had made similar warnings and pushed some changes, but Lee said much more needed to be done to address a problem projected to cost taxpayers about $375 million next fiscal year and grow to $532 million two years later.

He likened it to a dam cracking.

“I see the big crack in that wall, and I’ve got to mend it,” Lee said. “Otherwise, I think, we’re not that far away from somebody asking the really ultimate question: Why do we need a pension at all? And I don’t want to ever get there. I think there are good reasons for our society and San Francisco to have a pension, but it’s got to be affordable and it can’t hurt our ability to run the city.”

Lee said he is seeking broad support for fixes that are verifiable, but the problem is urgent. He has meetings scheduled all week on the topic, including Thursday with labor leaders and financier Warren Hellman. A formal proposal is still several months away and will require voter approval, Lee said.

“If it’s planned well, then we have an ability to stop these leaks. We have to stop them,” Lee said. “They’re going to kill our general fund.”

The mayor said he’s trying to avoid a bruising ballot box fight on pension reform like the heavy opposition from organized labor that sank Public Defender Jeff Adachi’s Proposition B in November. Adachi has indicated he would tweak the proposal and put it to voters again.

“I’m reminding Jeff Adachi and others, don’t go head into what you think is the political landscape here. Let me have a chance to work with everybody,” Lee said. “I told Jeff I didn’t like the way he approached it because he didn’t do that verification, he didn’t share with labor and others. That’s why the thing lost, but it also created really hard feelings.”

Despite recent urging from the left, the mayor said he would not make new taxes “a priority to balance the budget.”

“I’m not ready for that yet,” Lee said. “I’m open to other revenue ideas first, but … I can’t rule it out. I’ve said to everybody that everything is on the table.”

To close the budget gap, he pointed to job growth and specifically mentioned keeping Twitter headquarters in San Francisco. The city is trying to use payroll tax exemptions to entice the micro-blogging firm to expand into offices in the Mid-Market area, attracting other businesses and boosting property and sales tax receipts.

“We think that’s a great revenue producer, because it has the potential to increase from the current 350 jobs to over 600 jobs in nine months,” Lee said. “That’s what I’d like to see more and more of.”